Gold Buying Rush Due To ₹ 2,000 Notes Withdrawal? What Jewellers Say

Jewellery sale has risen marginally after the central bank's move to withdraw ₹ 2,000 notes from circulation, but it can't be compared with the 2016 rush when ₹ 500 and ₹ 1,000 notes were discontinued, say jewellers.

The Reserve Bank of India's Friday announcement to take back ₹ 2,000 notes in exchange for lower denomination ones differs from the 2016 exercise as the ₹ 2,000 notes will remain legal tenders.

The 2016 exercise saw panic buying of the precious yellow metal, a trusted investment tool for middle-class Indians that was at half of its current prices. But the situation this time is different, says a top jewellers body.

He also denied reports that customers are paying premium prices for jewellery.

"There may have been isolated incidents. Gold prices are already very high at over ₹ 60,000, while it was around ₹ 30,000 during demonetisation," he said.

The government guidelines require customers to submit KYC (Know your customer) details for transactions above ₹ 50,000 and PAN card above ₹ 2 lakh. For transactions above ₹ 10 lakh, the Financial Intelligence Unit of the government must be informed, he added.

Gold prices today saw a rise of ₹ 485 per 10 gram and reached ₹ 60,760. Last Friday, it was at ₹ 60,275.

But the rising prices didn't impact gold sale in the country's financial capital, neither did the note withdrawal move. At the century-old Zaveri Bazaar in Mumbai, it appeared like any other business day.

The impact has been less this time due to a shift to digital payment mode after 2016, many jewellers believe. They claim only 10% of their transactions are in cash since most customers prefer digital modes.

Kumar Jain, a jeweller, claimed customer footfalls have almost doubled at his store over the weekend. "Anyway, hardly 10% customers pay in cash," he said, adding momentum was already there in gold sale due to the ongoing wedding season.